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Sources and methods

Selection criteria and sources of data

The SIPRI Arms Industry Database includes public and private companies but excludes manufacturing or maintenance units of the armed services. Only companies with operational activities in the field of military goods and services are included, not holding or investment companies.

The sources of data on the companies include company annual reports and websites, and news published in the business sections of newspapers, in military journals and by Internet news services specializing in military matters. Press releases, marketing reports, government publications of contract awards and country surveys are also consulted. Publicly available information on financial and employment data on the arms industry worldwide are limited. The scope of the data and the geographical coverage are largely determined by the availability of information.

SIPRI data on arms-producing and military services companies is revised on an on-going basis as improved data becomes available. For this reason, it is not possible to make a strict comparison between editions of the SIPRI Yearbook. In addition, coverage may differ because of problems with obtaining data to make satisfactory estimates for all companies every year. However, the Top 100 lists from 2002-2015 available on this website are based on a common, up-to-date set of data, and may be meaningfully compared with one another.

Definitions

Arms and military services sales (arms sales for short) are defined by SIPRI as sales of military goods and services to military customers, including both sales for domestic procurement and sales for export:

Military goods and services are those that are designed specifically for military purposes and the technologies related to such goods and services. Military goods are military-specific equipment and do not include general-purpose goods, such as oil, electricity, office computers, uniforms and boots.

Military services are also military-specific. They include technical services, such as information technology, maintenance, repair and overhaul, and operational support; services related to the operation of the armed forces, such as intelligence, training, logistics and facilities management; and armed security in conflict zones. They do not include the peacetime provision of purely civilian services, such as health care, cleaning, catering and transportation, but supply services to operationally deployed forces are included.

The SIPRI definition of arms sales serves as a guideline; in practice it is difficult to apply. Nor is there any good alternative, since no generally agreed standard definition exists. In some cases, the data on arms sales reflects only what a company considers to be the defence share of its total sales. In other cases, SIPRI uses the figure for the total sales of a ‘defence’ division, although the division may also have some unspecified civil sales.

When the company does not report a sales figure for a defence division or similar entity, arms sales are sometimes estimated by SIPRI. Such estimates are based on data on contract awards, information on the company’s current arms production and military services programmes, and figures provided by company officials in media or other reports. For all these reasons, the comparability of the company arms sales figures given in the Top 100 is limited.

Data on total sales, profit and employment is for entire companies, not for arms-producing and military services activities alone. All data is for consolidated sales, that is, including those of domestic as well as foreign subsidiaries. The data on profit represents profit after taxes. Employment data is year-end figures except for those companies that publish only a yearly average. All data is presented on the financial year basis reported by the company in its annual report.

Calculations

All data is collected in local currency and at current prices. For conversion from local currencies to US dollars, SIPRI uses the International Monetary Fund (IMF) annual average of market exchange rates (as provided in International Financial Statistics). The data in the Top 100 is provided in current dollars.

Changes between years in this data are difficult to interpret because the change in dollar values is made up of several components:

the change in arms and military services sales,

the rate of inflation and,

for sales conducted in local currency, fluctuations in the exchange rate.

Sales on the international arms market are often conducted in dollars. Fluctuations in exchange rates thus do not have an impact on the dollar values but affect instead the value in local currency.

Calculations in constant dollar terms are difficult to interpret for the same reasons. Without knowing the relative shares of arms and military services sales derived from domestic procurement and from arms exports, it is impossible to interpret the exact meaning and implications of the arms sales data. This data should therefore be used with caution. This is particularly true for countries with strongly fluctuating exchange rates.

SIPRI

SIPRI is an independent international institute dedicated to research into conflict, armaments, arms control and disarmament. Established in 1966, SIPRI provides data, analysis and recommendations, based on open sources.